2019 (8) TMI 1915 - HC - Indian Laws

Seeking leave to proceed under the provisions of the SARFAESI Act, 2002 in respect of its secured asset - proceeding under Section 9 of the Arbitration and Conciliation Act, 1996 - HELD THAT - There cannot be any doubt that the bank is entitled under the SARFAESI Act, 2002 to put the property for sale in order to realize its claim against the parties to the proceedings and the jurisdiction of a Civil Court is clearly barred under Section 34 of the SARFAESI Act, 2002. The object for which the order was passed seems to have been frustrated by reason of the parties being unable to hand over vacant possession of the property to the bank. The learned counsel for the parties submit that there was no such direction in the order passed by the Co-ordinate Bench directing the parties to make over vacant possession of the property in question so as to enable the bank to put the property for sale as a vacant property without any encumbrance. The learned counsel for the parties have submitted that the parties to the proceedings shall file affidavits of undertaking that the property should be sold free from all encumbrances and they shall hand over the possession of the property in favour of the successful buyer after the sale is concluded in terms of the order dated 24th January 2018. The matter stands adjourned till 11th September, 2019 within which time all the parties shall file their respective affidavits of undertaking - Let this matter be treated as heard in part .

Summary

Issues: Application for leave to proceed under SARFAESI Act, 2002 for sale of secured asset due to inability to get vacant possession of property; Frustration of order passed by Co-ordinate Bench; Jurisdiction of Civil Court under SARFAESI Act, 2002; Direction for sale of property free from encumbrances and possession to be handed over to successful buyer.

In this judgment by the High Court of Calcutta, the applicant bank filed an application seeking leave to proceed under the SARFAESI Act, 2002 for the sale of its secured asset, a property at Mandeville Gardens, Kolkata. The necessity for this application arose from a previous proceeding under Section 9 of the Arbitration and Conciliation Act, 1996, where a Co-ordinate Bench ordered the bank to sell the property to secure the bank's claim. However, the bank faced challenges as the property was occupied, preventing the bank from obtaining vacant possession and realizing the maximum sale amount. The bank feared potential contempt or adverse orders if it proceeded under SARFAESI without vacant possession.

The judgment clarified that the bank is entitled under the SARFAESI Act to sell the property to recover its dues, and the jurisdiction of a Civil Court is barred in such matters. The order directing the sale was frustrated due to the inability to obtain vacant possession. To address this, the parties were directed to file affidavits undertaking to sell the property free from encumbrances and hand over possession to the successful buyer. The judgment highlighted the need for compliance with this direction to facilitate the sale process effectively.

The Co-ordinate Bench's order was set aside, and the bank was directed to take immediate steps for the sale of the property by publishing advertisements as per the SARFAESI Act rules. Parties were allowed to submit offers, with the sale being confirmed in favor of the highest bidder upon full payment to the bank. The judgment adjourned the matter for parties to file affidavits of undertaking, emphasizing that failure to do so may lead to further orders. The judgment concluded by treating the matter as "heard in part," indicating ongoing proceedings and the need for compliance with the directions provided.